Supervalu sees better-than-expected Q1 results
MINNEAPOLIS — Supervalu reported net sales of $5.2 billion for the first quarter of fiscal 2014, down 1.5%, and net earnings of $85 million, or $0.34 per diluted share.
The decrease in net sales primarily reflects a decline in identical store sales of negative 3% percent for retail food and negative 1.9% for Save-A-Lot. Identical store sales for corporately operated stores within the Save-A-Lot network were negative 1.2%.
“Our first quarter was highlighted by a renewed focus on driving sales and cash in all segments of our business and I’m pleased with the progress we made, especially the sequential improvement in sales trends from the fourth quarter of fiscal 2013 in each of our business segments,” said Sam Duncan, Supervalu president and CEO. “We have a good foundation, strong leadership team, improved debt maturity profile and achievable goals across each operating segment.”
Specifically across its retail food operations, which include pharmacy, Supervalu posted net sales of $1.4 billion, down 2.9%, primarily reflecting that same-store sales decline of 3%.
But there is still a lot of work to do, Duncan acknowledged, as Supervalu focuses on turning identical sales positive. To that end, Supervalu has started revamping its center store, eliminating aisle stands for less clutter and improving product adjacencies. "Our focus remains on generating positive ID sales," Duncan told analysts Thursday morning. "We will make the necessary investment to accomplish this goal."
And right now, that investment is happening across merchandising improvements vs. a primary focus on improving competitive pricing. "When it comes to talking about pricing vs. merchandising opportunities … the opportunities in merchandising, there were so many of them [that] they far outweighed [the number of] opportunities in pricing."
Shares of Supervalu were selling more than $1.15 higher at $7/92 per share in mid-morning trading. Supervalu reported better-than-expected improvements in sales, prompting many investors who had shorted the stock to cover their positions, according to a report in Reuters.
The company also elected the final two members to its reconstituted board: Eric Johnson, president and CEO of Baldwin Richardson Foods Company, and Supervalu president and CEO Duncan.
“I am very pleased that Eric has joined the Supervalu board of directors,” stated Bob Miller, Supervalu non-executive chairman. “He will bring a unique perspective to the group as both an entrepreneur and as a major producer of products and ingredients to the food industry. I am also happy to announce that Eric’s appointment brings to a completion our director search and allows Sam to become an active participant on our board going forward."
Baldwin Richardson Foods Company is one of the larger African American owned businesses in the food industry. Johnson was the CEO of Johnson Products Company from 1989 to 1991, purchased Baldwin Ice Cream Co. in 1992, and in 1997 completed the acquisition of Richardson Foods from Quaker Oats Company to form Baldwin Richardson Foods Company. Today, Baldwin Richardson is a major producer of products and ingredients for McDonald’s Corporation, Kellogg, General Mills and Frito Lay.
Johnson serves as a member of the board for Lincoln National Corporation and is chairman of its Finance Committee. He also sits on the board of trustees for Babson College and serves on the board of the Urban League of Rochester. Johnson is a graduate of Babson College.